More than half of Canadian restaurants operating at a loss, report finds

After navigating challenging economic conditions during the COVID-19 pandemic, the outlook for the restaurant industry as a whole looks bleak.

According to a recent report by Restaurants Canada, more than 50 per cent of restaurants and foodservice businesses are operating at a loss or barely breaking even.

The update comes as total spending at restaurants is on track to top $110 billion this year, which is a 10 per cent increase from 2022.

However, for the first five months of 2023, bankruptcies in the sector rose by about 50 per cent compared to the same period last year.

READ MORE
• Restaurant Industry Alert: 2024 Brings Economic Challenges, Says Morningstar
• Employment Lawyer on Legal Changes For Restaurants: CTV Interview

“It’s very challenging because everything that goes into operating a restaurant has increased double digits,” Richard Alexander, the group’s executive vice-president, told CBC News during an interview.

Alexander added that he believes more bankruptcies are on the way during this “really, really critical time.”

Demand for dining out dwindling

According to data from OpenTable, a restaurant reservation system, national demand for dining out has declined by approximately three per cent this month.

In Toronto, demand has fallen for five months in a row, while Edmonton has continued to see a decrease since April.

Termination agreements for restaurant industry employees

As the restaurant industry continues to grapple with rising costs, rent increases, and dwindling demand for in-person dining, some employees could be fired or let go.

In Canada, non-unionized workers are owed full severance pay when they lose their jobs due to downsizing, corporate restructuring, or the closure of the business.

This includes individuals working full-time, part-time, or hourly in Ontario, Alberta, and B.C.

People working “on contract” or as a contractor may also be owed severance pay — given that many employees in Canada are often misclassified as independent contractors.

Severance can be as much as 24 months’ pay, depending on a number of factors.

LEARN MORE
• Severance for provincially regulated employees
• Rights to severance during mass layoffs
• Severance pay in a recession

WATCH: Employment lawyer Lior Samfiru explains what rights employees have if they are being fired or let go on an episode of the Employment Law Show.

Given the state of the restaurant industry, you could be entitled to more compensation if it’s harder for you to find work in the sector.

Before you accept any severance offer, have an experienced employment lawyer at Samfiru Tumarkin LLP review it and your employment contract.

We can tell you if what you have been provided is fair and how to get proper severance if it falls short of what you are actually owed.

If you don’t receive the correct amount, which happens often, you have been wrongfully dismissed and should pursue full severance pay.

In some cases, employers pressure staff into accepting poor severance packages — such as imposing a deadline for accepting the offer.

Non-unionized employees in Canada have up to two years from the date of their dismissal to pursue a claim for full severance pay.